Zim needs export promotion strategy

Dr Gift Mugano
Since dollarisation Zimbabwe witnessed incessant trade deficits which cumulatively increased to around $3 billion.

From a trade perspective, our exports have been largely concentrated around three product categories, that is, minerals, tobacco and cotton. These three products constitute about 85 percent of total exports. To make matters worse, the same products suffer from the vagaries of international trade such as volatility of commodity prices.

On the contrary our imports have been largely made up of finished goods which are both unproductive and expensive. This situation is a dire one. The general outcome of this situation manifested itself in the form of liquidity crunch, company closures and unemployment among other economic ills.

In addition to the ongoing economic stabilisation measures Government is putting in place, Zimbabwe needs an export promotion strategy. The country is yet to come up with a clear or well-articulated plan aimed at driving exports. If anything, the current exports are happening by accident. To make my case practical, in this discussion, I will draw lessons from Ghana.

Ghana’s long term vision sets out to achieve consistently higher levels of gross domestic product (GDP) growth and job creation through increased production for both domestic and international markets.

This required a strategic orientation capable of transforming Ghana into an export driven economy that delivers high levels of productivity as well as decent jobs, on a scale significant to achieve equitable social and economic development.

Over the years Ghana has enhanced its international trade status with both traditional and non traditional exports recording substantial growth. A remarkable feature of Ghana’s external trade sector is that the structure of exports continues to be dominated by raw cocoa beans, gold, and timber since the colonial era. For this trend to change it became necessary to diversify exports by moving away from traditional exports to non-traditional export.

Deriving from the above, Ghana formulated a National Export Strategy (NES) with an overall objective of developing the potential of the non-traditional export sector to enable it make maximum contribution to GDP growth, create formal decent job opportunities and ensure higher standards of living.

The NES was situated within the context of the Medium-Term Development Policy Framework: Ghana Shared Growth and Development Agenda 2010-2013, which has identified the private sector as the main agent of change and key actor in developing the non-traditional export sector.

The First Medium-Term Private Sector Development Strategy (PSDSI) was implemented to enhance the competitiveness of the private sector. As a follow-up, the Second Medium-Term Private Sector Development Strategy (PSDS II) was formulated with the principal objective of creating jobs and enhancing livelihoods for all.

The purpose of formulating the NES was to provide the strategic direction and thrust for mobilising financial and material resources and the energies of the private sector to deliver the NES.

During the 2010 – 2013 period, Ghana was on the way to joining the group of important global oil exporting nations. Despite the attractions of oil revenue, the government has taken a bold policy decision to stay focused on developing the non-oil/ non-traditional export sector.

The NES is driven by envisioning Ghana as a world class exporter of competitive products and services underpinned by three objectives:

To achieve a 35 percent increase in total exports per year;

To strengthen and resource export development related institutions and networks of business development service providers, policies and programmes; and

To ensure that every district develops at least one significant and commercially viable export product.

The Ghana national export strategy had four planned strategic outputs, that is:

Reduced impediments, uncertainties, risks and costs in production and conducting of export business;

Enhanced export value chain infrastructure and support services delivery;

Capacity of the Ghana Export Promotion Council, metropolitan, municipal and district assemblies enhanced to promote export so that every district is able to develop at least one significant export product preferably from the Priority Product List; and

Strengthened and expanded institutional capacity for export-oriented human capital and resource development to enable exporters to stay abreast with modern trends, best practices and demands of the contemporary international market.

Ghana appreciated that products vary considerably in their export performance. Therefore, a priority product selection approach was adopted for concentrating resources on a limited range of products for export development following a specific set of criteria and priority setting methodology developed for this purpose.

The priority list focused on products which are likely to make a significant contribution to achieving the strategic growth target revenue of $5 billion by the fifth year of the NES.

The final selection of products has been informed, among other things, by gestation period and the ability to generate the expected rate of revenue growth.

The priority products list comprises:

Cocoa Products (i.e. Paste, Butter, and Confectionery);

Wood products (Veneers, Plywood, Builders’ Woodwork and Fibre board);

Fresh/chilled and processed fish;

Articles of Plastic;

Vegetable oil seeds and oils;

Natural rubber and rubber products;

Aluminium products;

High value horticultural products;

Cashew nuts and processed cashew.

Textiles and garments, pharmaceuticals and selected products of the creative arts industry were also added, based on special considerations.

The products on the priority list were also informed by the key findings from market exploration and products’ specific comparative advantage. The local trade promotion agency was given a key responsibility to explore market in key tradition markets such as European Union and Economies of Western African States (ECOWAS).

In addition, the Ghanaian export promotion agency, through research and export promotion strategies, established markets for the new products in the newly emerging economies where disposable income is growing rapidly which inter– alia include Brazil, Russia, India and China, the Middle East, Eastern Europe and certain Latin American countries.

Critical issues of export sector-wide

Zim needs export promotion strategy

impact addressed by the NES include human capital and export competency development, infrastructure, transportation, technology, trade facilitation and Finance.

The development of the selected priority products was supported with a vigorous programme of investment promotion and an effective “local content policy” where applicable.

The NES contains a major initiative to substantially engage all the districts in the national export effort with important implications for improved balanced regional/spatial development, geographical distribution of job and income opportunities and poverty reduction.

For these objectives and outputs to be achieved, Ghana applied a selected instruments across a broad spectrum of the national export strategy categorized into the following components:

Production and supply base expansion;

Export market development;

Manpower development and training;

Incentives and regulatory framework; and

Cross-cutting issues.

Actual implementation of the National Export Strategy was effected through a National Export Development Programme (NEDP) which comprised detailed implementation plans with corresponding budget and logical framework specifying the activities to be undertaken, the expected chains of results, time frame, estimated costs, and the management and coordination responsibilities of key stakeholders.

The NEDP was implemented over a five-year period from January 2012 – December 2016, recognising that some interventions in the domestic economy must be time bound.

The NEDP complements the Trade Sector Support Programme, the Industrial Sector Support Programme and the Private Sector Development Strategy II, with programmes and activities to ensure that a comprehensively supportive environment is in place for accelerated export development in Ghana.

Underlining the NEDP is a well-articulated Results-based Management (RBM) system, which is a participatory team-based approach that seeks to:

Focus efforts and resources on delivering expected results; and

Improve accountability for resources used.

Measurement of performance shall be done through:

Clearly defined outputs (results) in the NEDP’s Monitoring and Evaluation (M&E) Framework and Project work plans;

Linking resource requirements to clearly defined outputs expected to be achieved through the implementation of planned activities; and

Use of results information for management decision-making, learning from experience, capacity building and accountability reporting.

This approach ensures a shift away from focusing on inputs and activities as a way of measuring performance. The NEDP was driven primarily by the Ministry of Trade and Industry but was coordinated through a National Export Strategic Steering Committee.

Together we make Zimbabwe great.

Dr Mugano is an Author and Expert in Trade and Competitiveness. He is a Research Associate at Nelson Mandela Metropolitan University and a Senior Lecturer at the Zimbabwe Ezekiel Guti University. Feedback: Email: gmugano@gmail.com, Cell: +263 772 541 209.

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